The Korean Economic Review
Principle of Targeting in Environmental Taxation: Corrigendum
Firouz Gahvari (University of Illinois at Urbana-Champaign)Year 2012Vol. 28No. 2
In deriving the elements of Δ􀀄w for the CES example in Gahvari (2010), thesign of the income term in the Slutsky equation is as negative rather than positive.Specifically, instead of writing ∂x􀀄 / ∂p = ∂x / ∂p+ x∂x / ∂M the expression iswritten as ∂x􀀄 / ∂p = ∂x / ∂p− x∂x / ∂M (and similarly for ∂x􀀄 / ∂q and ∂y􀀄 / ∂q ).This does not change any of the paper’s results including the point that the exampleillustrated. Its sole import is wrong algebraic expressions for the optimal tax rates inthis example. The entire subsection with corrected expressions is as follows.